Can you eat 10 Pizzas at once?

Well maybe you can but most people can’t eat 10 pizzas in one seating. The reason for this is simple, we simply can not ‘digest’ all that food at once. What happens next, we get sick, ‘fall down’ and wait for the paramedics to come and rescue us…

Parabolic stock movements are no different. They can be compared to eating 2, 5 or even 10 pizzas at once. What happens next is quite obvious most of the time. They get ‘stuffed’ and can not digest all that activity. They most likely to start falling as early as mid afternoon session. And the next day they continue to be sick. Amazingly when they recover, they might ask for more Pizza (not uncommon to see the stock to go for half a parabolic move or upwards trend from day 3 or day 4 but eventually fades off again in a week or two).

New traders – Study parabolic moves and specifically study all the charts associated with those moves to get yourself familiar with the given stock, how it behaves, what it likes to do, price action in certain times and what was the reason behind the move itself, etc.

Patience and trade size is the key in these type of plays….think about it before going in to the trade.. What is your plan & what to do if it goes against you and more importantly¬† when to exit…

So when you see the fat boy on the block next time, you know what to do.

I hope it helps.

MT

 

Leave a Reply

Your email address will not be published. Required fields are marked *